Health care reform, most would agree, is a complex and controversial issue. Happy that we are finally engaged in a public debate on health care, I want to focus on a segment of that debate I have commented on in this column twice before; namely, leveling the playing field for small businesses. It seems the insurance industry and some in Congress are discussing provisions of a bill that could bring affordable private insurance for small business and self-employed people closer to reality.
Here are just two numbers to help put this into prospective. According to the Kaiser Family Foundation, U.S. Census Bureau 2007 statistics indicate that 46 million people are uninsured. About 23 million of them either work in or are dependents of those who work in small businesses.
One half of the health care coverage problem, then, could have been solved with passage of the Small Business Fairness Act in 2005 or when the act came before Congress again in 2008. Both died in Committee or were defeated in floor votes. This because some in Congress, in my opinion, would settle for nothing less than a total government takeover of the U.S. health care system with many demanding it be a single payer system.
In May, however, Sen. Richard Durbin (D-Ill.) and Rep. Ron Kind (D-Wis.) introduced the Small Business Health Options Program (SHOP) Act of 2009. The bill would provide the self-employed and small businesses with a means of purchasing health insurance through a nationwide health insurance purchasing pool that would offer a choice of health plans.
“SHOP” has been very influential in the development of the broader health care reform package now being debated. The bill, much like the broader reform bill, articulates underwriting, rating and benefit rules that underscore larger risk pools, national rating and underwriting rules, certain guarantees and tax credits for small businesses; a very constructive approach to achieving affordable private insurance for small business owners, their employees and dependents.
A New Marketplace
The means for accomplishing these things begins with an “Exchange” where individuals or small businesses would go to obtain information, compare plans and prices and purchase private health insurance plans. The Exchange would also determine if a particular policy meets the criteria set by the new federal rules. A public insurance option may also be included, but that’s another issue for a different article.
Some of the rules being proposed might include national uniform rating rules, guaranteed issue and renewal rules and a prohibition on health status or pre-existing conditions as underwriting criteria. The use of age as a rating concern may be permitted. Curiously, the fact that the elderly would be the only class singled out for higher premiums runs counter to the stated purpose of reducing costs to consumers.
Under the proposed bill, a Health Benefits Advisory Committee would determine which benefit options are required and mandate coverage. My preference, if a committee were necessary at all, would be for it to mandate a list of required coverage options that must be offered. The choice of coverage must be left to consumers.
The definition of a “small business” is as yet undetermined but, in my view, must be as broad as possible and allow for the aggregation of trade and other group purchasers to maximize purchasing power and level the playing field with larger business, union and government entities. Employer mandates, and the significant penalties proffered in the larger health care reform bill, fail to recognize that some very small businesses simply cannot afford to pay for health insurance. These businesses account for significant job creation that would be adversely affected by such a provision. Even to pay the penalties, some small businesses might be forced to terminate employees to cover their costs; clearly a less acceptable option for those employees.
How or if the Congress succeeds in re-engineering our entire health care system remains to be seen. Nevertheless, some of the measures introduced by SHOP, and still being discussed, could provide an opportunity for private insurers to offer affordable small business health insurance.
I do not support a total overhaul of the system but can see the benefit of solving one half of the problems by encouraging Congress to move on the “SHOP” Act now. This practical solution, which would cost a small fraction of other proposals, deserves a fair and public debate.
